Why is it important to get a great deal on a rental property?
- The less you pay for a house, the more money you will make every month. Some areas of the country do not have great rent to value ratios for landlords. However, if you can buy a property for 20 percent less than it is worth, that may make the property profitable.
- The better deal you get, the easier it will be to refinance the house and take money out. If the property appraises high enough, you might be able to get your down payment back, plus all the money you spent on repairs.
- The better deal you get, the more willing banks and other investors will be to lend to you. If you are buying houses well below market value, banks will feel safer lending to you and private investors won’t worry about you losing all their money.
- Buying houses below market value increases your net worth. When you buy a house for 20 percent less than it is worth, it instantly add tens of thousands of dollars to your net worth. This also makes you look better to banks, because the higher net worth you have, the more stable you look.
- It is much safer to invest in real estate when you have equity. The biggest fear most real estate investors have is losing their hard-earned money. The best way to avoid losing money with rentals is to buy them cheap, with cash flow. When the market goes down, you still make money every month and do not have to sell. If you do have to sell, it is much easier to do so when you purchased a great deal to begin with.